In analyzing fundamentals, we need to understand the three indicators of,, and inflation.
Understanding the meaning of these three economic indicators and their impact on foreign exchange can help to judge the fundamentals more accurately.
High GDP growth rates push up the domestic currency, while low growth rates lead to a decline in the country.
The value of the final goods and services produced by a country or region in the economy can be a good measure of the economic situation, economic performance and national strength of a country.
If a country’s growth is significant, it indicates that the country’s economy is thriving, national income is increasing and spending power is increasing.
Conversely, if a country’s GDP shows a negative trend, it indicates that the country’s economy is in recession and its spending power is declining.
Interest Rate Interest rate is the most important factor affecting the exchange rate.
Interest rate is the ratio of the amount of interest to the total amount of borrowed capital in a given period.
The exchange rate is the relative price of the two countries.
The exchange rate is determined by supply and demand in the foreign exchange market.
Foreign exchange is a financial asset that generates capital gains for its holders.
Yields on national currencies are measured by interest rates in their financial markets.
If one country tightens credit, interest rates will rise, which will also lead to international flows of money in the short term.
Conversely, if a country loosens credit, interest rates fall, leading to large capital outflows and a worsening capital account balance, the currency becomes unpopular in foreign exchange markets and the exchange rate falls.
Inflation Inflation means rising prices in the country.
Price is the monetary expression of the value of goods, and inflation also means a decline in the quantity of value.
When commodity markets are closely linked, inflation will reduce exports and increase imports, changing supply and demand in foreign exchange markets, and causing national exchange rate fluctuations.
It should be noted that the three indicators of change are the consumer price index, the producer price index and the retail price index.
The ups and downs of the pandemic dented risk appetite, the dollar strengthened gold fell, and oil prices fell more than 2%.
Please pay attention to the specific operation, the market is changing rapidly, investment needs to be cautious, the operation strategy is for reference only.
